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Retrofit: The Lehman effect – the meltdown leading to a ‘boom to bust’ scenario

Guest Column
Retrofit: The Lehman effect – the meltdown leading to a ‘boom to bust’ scenario

Author | Sandeep Bamzai | Thursday, Nov 20,2008 6:43 AM

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Guest Column <br>Retrofit: The Lehman effect – the meltdown leading to a ‘boom to bust’ scenario

The domestic media and advertising economy is under the cosh. The gangbuster years are behind us and a serious reality check is now under way. And the looking glass is not showing a very happy image. UTV has already indicated that it is going to pare down its outlays across channels. Further, it has reportedly whittled its business channel UTVi’s Delhi operations.

Bhaskar has deferred the launch of its Hindi news channel by a year. The Economic Times’ financial tabloid, ‘Market Mantra’, has been pushed back to April 2009 even as it gears to launch its television operations as early as late January-early February 2009. On August 4 this year, TV18 had filed applications for three new channels – Gujarati, South and Channel 3. But this was before Lehman and I am sure there must be a re-evaluation of the risk, thanks to the pervading ecosystem.

Internally, it is believed that only Gujarati may get the go ahead in the short term. At the same time, there is no clarity on the Forbes and Financial Times launches. Business Standard’s management committee and senior personnel have taken a 10 per cent voluntary pay cut while the top deck editorial leadership have been asked to forgo Leave Travel Assistance (LTA), which works out to one month’s salary for the year. Remember, they weren’t given any increments this year. Which tantamounts to a 20 per cent cut for the year – no increment plus a 10 per cent wage cut.

The gloom and doom scenario is rapidly unraveling itself in the Rs 14,900 crore media economy. Bennett Coleman is the only entity which remains flush with cash and is in expansion mode. For its integrated news room, a senior ET editor has been sent to the US to study five top contemporary news rooms, including CNN at Atlanta. TOI is parallely driving its convergent theme zeroing in on a digital theme, whereby print and Internet work in unison. Mint ran a good story recently on the crisis plaguing print publications, in the main magazines. The story detailed how India Today had shut down three top English edition supplements – Pink, Spice Solo and Auto; wound up two supplements – Manashi and Uttoron – with its Bengali edition. Outlook has slashed two of its supplements – City Limits and Envy.

RPG Enterprises New Yorker clone Talk, which was scheduled to be seen on the stands this September, has also deferred its launch to early next year, ostensibly due to lack of office space. As it is, magazine readership figures are showing a marked decline. This, coupled with rising newsprint costs and weaker advertising flows, has been a major setback for existing and new players. Hindustan Times has reportedly frozen all recruitments, as has TOI.

DNA deferred its Bangalore launch twice, while Financial Chronicle has kept January 26 as its Delhi launch date, but this too might not be cast in stone. Perhaps that is why there is a clamour for a hike in print media FDI to 49 per cent. Representatives of the print industry have met the Prime Minister a couple of times and argued their case for this increase. The ramp up will probably allow some of the print players to bring in foreign investors and as such, some cash to bankroll their dreams and aspirations.

Reliance Big Entertainment’s Big Broadcasting has also rescheduled its launch plans for its music and GEC channels. It is also believed that principals have initiated a cost and HR audit at INX Media. The tale of woe continues across media. And I am not even going to the smaller fry in the telly news business. That is where the bleeding is at its worst. It has now spread to the entertainment industry with deals being renegotiated or reneged in the Hindi film industry. The Balaji-Sunjay Dutt JV, for instance, is off.

But adversity always presents opportunities. Former BPL Mobile boss Rajeev Chandrasekhar is on the prowl looking for an English news channel. Some names are doing the rounds, but there is no clarity yet. Actually, this is as good a time as any to get one at a bargain basement price. Chandrasekhar, who has always nurtured media ambitions, used to own the Asian Age franchise for Mumbai, bought Asianet, owns two radio stations in Goa and Bangalore, is scouting for an English newspaper and has just structured a joint venture with Star for a majority stake in Asianet through his holding company Jupiter Capital.

But there is another facet to this downturn in the media economy – lack of fresh programming due to the protracted strike – is debilitating GECs. However, that has been resolved now that the standoff between the Federation of Western India Cine Workers (FWICE) and the producers is over and the strike has been called off.

While the strike was on, ET had carried an interesting story on how advertisers had begun to shift from GECs to cricket and news channels. TV ad spend is in the vicinity of Rs 7,000 crore, with GECs alone accounting for close to half of that. The ET story quoted a Zee TV spokesperson saying that advertisers weren’t diverting spends, but deferring, which means that GECs are hurting. And with the Indian cricket team on a roll, the natural beneficiary is NEO Cricket, which has the telecast rights.

Tough times are here and they will stay. Expect the downturn to last for anything between 18 and 24 months. You will see many more closures, many more collapses and big ticket losses.

(Sandeep Bamzai is a well-known journalist who started his career with The Statesman in Kolkata in 1984. He has held senior editorial positions in some of the biggest media houses in three different cities - Kolkata, Mumbai and New Delhi - with The Indian Express, Illustrated Weekly, Sunday Observer, Dalal Street Journal, Plus Channel where he ran India's first morning business show on Doordarshan, The Times of India Group, Business India, Hindustan Times and Reliance Big Entertainment. Starting his career as a cricket writer, he graduated to becoming a man for all seasons under Pritish Nandy, who he considers as the premier influence on his career. Since he studied economics at Calcutta University, Bamzai decided in 1993 to branch out into business and financial journalism. Familiar with all three media, he is the author of three different books on cricket and Kashmir.)

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